Home, vehicle, other retail loans to become cheaper: Finance Minister

Nirmala Sitharaman also said that banks will pass on RBI rate cut benefits to borrowers through MCLR reduction.

New Delhi: The government on Thursday announced a slew of measures to ensure that loans for home, vehicles and consumption goods become cheaper and widely available through banking and non-banking finance companies.

Addressing the media here, Finance Minister Nirmala Sitharaman also said that banks will pass on RBI rate cut benefits to borrowers through MCLR reduction.

She said that banks will launch repo rate and external benchmark-linked loan products that will lead to reduced easy monthly installments for housing, vehicle and other retail loans.

The minister also announced additional liquidity support of Rs 20,000 crore to housing finance companies (HFCs) by the National Housing Bank (NHB), thereby increasing the total support to Rs 30,000 crore.

The government announced a partial credit scheme for purchase of pooled assets of non-banking finance companies and HFCs up to Rs 1 lakh crore to be monitored at the highest level in each bank.

Prepayment notices issued to NBFCs will be monitored by banks.

The minister said that NBFCs will be permitted to use the Aadhaar authenticated bank 'Know Your Customer' (KYC) to avoid repeated processes.

The government has decided to make necessary changes in PMLA rules and Aadhaar regulations to ease the lending process.

"Working capital loans for the industry will also become cheaper," Sitharaman said.

To reduce harassment and bring in greater efficiency, public sector banks (PSBs) will ensure the mandated return of loan documents within 15 days of loan closure.

"This will benefit borrowers who have mortgaged assets," Sitharaman said.